The Economics Of MICE:
New Thinking Paints A More Accurate Picture
By Dr. Lee Chang-hyeon, Institute of Convention and Exhibition Management
 One of the main reasons why the convention industry is widely regarded as a high value-added service industry is the significant economic ripple effect generated by international conferences, as well as the boost in the brand value of the host city and country. The Korean convention industry has received significant support from recent efforts by the government to actively support the industry, as evidenced by the rising number of Union of International Associations (UIA) -standard international conferences being held in Korea.
While the number of UIA-standard international conferences held is widely used as one of the most reliable statistics for comparing the number of international conferences among different nations and cities, there are limits to evaluating the overall size and growth rate of a convention industry by using this single figure.
This becomes evident, for example, through an analysis of the city of Las Vegas. Despite the fact that Las Vegas is one of the world¡¯s top convention cities in terms of total convention venue area and size of the industry, as well as the fact that it is home to one of the most high value-added convention industries in the world, the city actually ranked behind Seoul (7th), Busan (31st) and even Jeju (38th) in the number of UIA-standard events held, coming in at a startlingly low 50th place in the world. Thus, the world¡¯s greatest convention city is actually ranked behind several Korean cities under this particular system.
An analysis of 2002 and 2006 meeting & convention studies provides a more accurate index for showing the growth of the domestic convention industry through the measurement of the amount of expenditures by event organizers as participants, and the resulting local economic impact.
According to a study carried out by "Meeting & Convention," an American convention industry publication, the number of events held rose by 20% between 2002 and 2006, while the number of participants rose by 70% and expenditure by visitors grew by 260%. By using only the number of events, the American convention market grew at a low rate of 5% per year. However, by taking into account total visitor expenditures, real annual industrial growth amounts to over 40%. Thus, merely using the number of events held to study industry trends can produce significantly distorted results.
The United Nations World Tourism Organization recently offered a new guideline for analyzing the economic effects of convention industries that takes into account this methodology to determine overall impact. This new guideline involves an overall analysis of the total economic effect to examine the size and scale of a nation¡¯s convention industry, instead of merely relying on a tally of the number of events held. Las Vegas has been using this new standard of measurement since the mid-2000s.
This year the city of Seoul will become the first autonomous regional government to conduct an analysis of the economic impact of city-sponsored international conferences and exhibitions on the local economy. This new methodology will overcome the limitations of using only the number of events held to gauge the state of the industry, offering a more accurate and relevant picture of how the city¡¯s convention industry-support policies affect regional economic development. It will allow Seoul to create more systematic and efficient support programs.
Moreover, it will enable Seoul to take part in an increasingly global trend toward a more accurate analysis of the importance of the convention industry, and thus help the city increase the effectiveness of its future support programs. By offering a superior analysis model, Seoul will induce other regional governments and municipalities to adopt these methods to accurately evaluate the convention industry as a high value-added service industry and formulate realistic and effective policies and support programs.
Dr. Lee wrote this article in light of Seoul's adoption of a new system for measuring the economic impact of international conferences on cities. The system is expected to provide a more accurate analysis of the effect of such meetings on regional development and enable cities to develop more effective support programs.
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